Aldermore IPO: Challenger bank plans to cut flotation price

Tim Wallace
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Phillip Monks is chief executive of Aldermore
Aldermore is planning to offer shares for a knock-down price to make sure the bank’s stock market debut goes smoothly this time around, City A.M. understands.

The challenger bank tried to float last September, but sudden market turmoil spooked investors and forced the lender to cancel the sale.

This time around Aldermore hopes that strong profit figures today will encourage investors back into the stock.

But to reassure buyers, and to guard against choppy conditions, the private equity owners will price the stock “to go” to seal the deal.

Last year the bank wanted to hit a valuation of around £800m, but Sky News yesterday estimated the stock would go at a 25 per cent discount on that figure, valuing the firm at around £600m.

The challenger bank is presenting its financial results today – two months earlier than last year’s presentation of its full year results.

As a result the lender will have more flexibility to launch its initial public offering (IPO) at the right moment.

It is particularly sensitive to market conditions, after its previous experience. At the same time last year, Virgin Money postponed its flotation.

But the rival bank was able to re-launch the process more rapidly to take advantage of improving market conditions.

Although Virgin had to price its shares at the very bottom of the range when it eventually did float in November, since then its stock has performed strongly, rising nine per cent over the past three months.

Aldermore and fellow challenger Shawbrook bank are also keen to float in the near future to avoid the turmoil of May’s general election, and the market chaos which could follow if there is no decisive result.

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